Health savings accounts help save money

From Chicago Sun Times



Amid the generally bad news about rising health-care costs and the growing number of uninsured is positive news that shares broad optimism: Health Savings Accounts, or HSAs. As more employers jettison health coverage because of rising costs (the Kaiser Family Foundation reports the percentage of companies offering coverage is down to just 61 percent), individuals are increasingly turning to HSAs for themselves and their families.



Several surveys indicate the market is going the HSA route -- a trend already signaled by recent ventures into the HSA market by insurance giants such as Aetna, Cigna and Blue Cross/Blue Shield. One company, Golden Rule Insurance Co. (a subsidiary of UnitedHealth Group), reports that 42 percent of its customer base is covered by an HSA policy. Incredibly, these HSA customers have already accumulated an astounding $141 million in their savings accounts.



This is proof that HSAs are actually working the way Congress intended when it passed a bipartisan bill making HSAs available to all Americans in 2003. The $141 million is money that Golden Rule consumers control to meet health care or retirement savings needs. These are dollars that, in the traditional third-party payment system, would have gone to insurance companies or been lost in the health-care system.



There's more good news about HSAs: According to ehealthinsurance.com, an online broker, the average premium for an individual HSA health insurance policy went down 19 percent in the first half of 2005. The monthly premium dropped from $137.94 to $111.57, which over a year will save consumers more than $300.



Given the annual bad news about rising health insurance costs (which leaves about 45 million Americans without coverage), this data helps to explain why the market is increasingly heading in the Health Savings Accounts direction. According to the Kaiser Family Foundation, those insured by employer-provided HMO, PPO and POS policies are paying an average of $308 in monthly premiums -- almost $200 more than those insured by HSAs.



The impact on consumers, especially low-income consumers who were previously uninsured, has been substantial. Just under half of the HSA customers who purchased their policies through ehealthinsurance.com and with incomes of less than $15,000 were previously uninsured for at least six months. Of those with incomes between $15,001 and $35,000, 43.4 percent were previously uninsured for at least half a year before obtaining an HSA policy.



With an HSA in conjunction with a high deductible health insurance policy, money is placed into a health account tax-free, grows tax-free, and can be withdrawn tax-free as long as it is used for medical purposes. Any money left in the account at the end of the year can be rolled over to the next year.



As the money in the HSA grows, it builds up resources a patient can use for routine and future medical care. And, because the money belongs to the individual from Day One, HSA users choose their doctors and hospitals -- no referrals necessary. When individuals have more control over health-care spending decisions, they become better consumers and health- care costs are driven downward.



Because HSAs are portable -- meaning the consumer owns the account -- individuals won't necessarily have to worry about losing coverage if they change jobs, lose a job or want to start a business. Lower costs, more choice and an opportunity to build savings? Perhaps our health care crisis is on the mend because of HSAs.